Piper v. Childs

• Decision Date: 02 May 1935
• Citation: 195 N.E. 763,290 Mass. 560
• Parties: PIPER v. CHILDS. SAME v. JEFFRIES.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

290 Mass. 560

195 N.E. 763

PIPER v. CHILDS.

SAME v. JEFFRIES.

Supreme Judicial Court of Massachusetts, Suffolk.

May 2, 1935

Report and Exceptions from Superior Court, Suffolk County; J. J Burns and Whiting, Judges.

Two actions of tort for deceit by Raymond H. Piper against Paul D. Childs and against J. Amory Jeffries, in each of which there was a finding for the plaintiff in the sum of $14,002.88. On report by the Superior Court and on exceptions saved by the State Street Trust Company to a denial of its motion for leave to intervene.

Intervener's exceptions overruled, and judgment ordered on the findings.

R. H. Lee and O. R. Waite, both of Boston, for plaintiff.

F. W Crocker, of Boston, for defendants Childs and others.

E. K. Arnold and V. S. Bigelow, both of Boston, for State Street Trust Co.

LUMMUS, Justice.

These are two actions of tort for deceit. The defendants were officers and substantial stockholders of a corporation named Childs, Jeffries & Company, Inc., which was in business as a broker and investment banker. The plaintiff, in January, 1929, having been employed for about a year as sales manager for the corporation, bought thirty-six shares of its stock at $550 a share. The defendants represented to him that its liquidating value was $551.55 a share. He did not see the books, and the defendants by their conduct discouraged him from asking to see them. The judge, sitting without a jury, found that the defendants were liable in deceit, found that the real liquidating value of the stock was $235.03 a share, and awarded the plaintiff as damages in each case the difference between the liquidating value as represented and the real liquidating value, with interest from the date of the writ. A finding was warranted that the difference in liquidating value was reflected in the market value and the actual value, so that the finding was consistent with the familiar rule that in actions for deceit the damages consist, apart from interest, in the difference in actual value between that which the plaintiff in fact got and that which he would have got if the representation had been true. Morse v. Hutchins, 102 Mass. 439; Whitney v. Lynch, 222 Mass. 112, 115, 109 N.E. 826; Picard v. Allan, 285 Mass. 15, 18, 188 N.E. 387; Anderson v. Rubin, 286 Mass. 361, 363, 190 N.E. 544. See also Murray v. Stanton, 99 Mass. 345; Joseph S. Wells Ass'n v. Helvering, 63 App. D. C. 254, 71 F.(2d) 977. The judge reported the cases for the purpose of presenting questions of law raised by the defendants.

1. There was evidence of all the essential elements of deceit. Alpine v. Friend Bros., Inc., 244 Mass. 164, 167,138 N.E. 533. Although the plaintiff had already expressed his pleasure at the idea of being admitted to the ‘ firm’ by being allowed to buy stock, no agreement was made until the defendants told him that the price asked, $550, was less than the liquidating value, $551.55. It could be found that the representation was relied on by the plaintiff and was made with intent that it should be relied on. It could also be found that the representation was false, and known by the defendants to be false. A false statement of value may give rise to an action of deceit. Standard Oil Co. of New York v. Back Bay Hotels Garage, Inc., 285 Mass. 129, 133, 188 N.E. 619; Commonwealth v. Coshnear (Mass.) 194 N.E. 900. The itemized list, with valuations, relied on by the defendants in making the representation, was produced, and the judge expressly found that certain assets were valued by the defendants on the basis of unreasonably hopeful prophecy rather than actual conditions. Since the list purported to include all the assets of the corporation, the judge was warranted in finding that an overvaluation of any item resulted in an overvaluation of the total of the assets. If the total was overvalued, the value thus attributed to each share of stock was more than it was really worth, and the plaintiff suffered by buying shares of stock worth less than they were represented to be worth. Connelly v. Bartlett, 286 Mass. 311, 315, 190 N.E. 799.

We think there was no error of law in the assessment of the damages. The net assets of the corporation as reported to the secretary of the commonwealth amounted to $176,719.07, and as shown by the books amounted to $191,297.99. Those figures, standing alone, would warrant a finding of an actual value much less than that found by the judge, and consequently a finding of larger damages. The amount of damages seldom can be proved with the exactness of mathematical demonstration. Much must be left to estimate and judgment, sometimes upon meagre evidence. C. W. Hunt Co. v. Boston Elevated Railway, 199 Mass. 220, 235, 85 N.E. 446; Whitcomb v. Reed-Prentice Co., 262 Mass. 348, 360, 159 N.E. 922; Parker v. Levin, 285 Mass. 125, 129, 188 N.E. 502, 90 A.L.R. 1446; Potier v. A. W. Perry, Inc., 286 Mass. 602, 606, 607, 190 N.E. 822. The judge apparently found that some actual assets were not shown by the books. The defendants contend that he found assets of such value that, on his own findings, the liquidating value of each share must have been greater than that which he found. But we discover no such inconsistency as is alleged, and therefore no error in the assessment of damages. The findings for the plaintiff must stand.

2. The State Street Trust Company, claiming to be a creditor of the plaintiff Piper upon a note, given for money borrowed for the purpose of buying the stock in question and secured by a pledge of the stock, filed a petition to be allowed to intervene and to receive any execution which may issue in favor of the plaintiff. This petition was heard by a judge other than the one who heard the action for deceit, and was denied, subject to the exception of the petitioner. The petitioner alleges that the stock is worthless, but that the cause of action is equitably an incident or appurtenance of the stock pledged. Without discussing whether there is any basis for this contention, it is enough for the purposes of this decision to say that the rights of the intervener cannot rise higher than those of an assignee of the cause of action holding an express assignment from Piper.

Intervention is possible in more than one class of cases. One common occasion for intervention arises when a court of equity has taken into its control property as to which the intervener claims a lien or other interest. In such a case the court has ancillary jurisdiction to determine, protect, and enforce the claim of the intervener. Hoffman v. McClelland, 264 U.S. 552, 558, 44 S.Ct. 407, 68 L.Ed. 845; Fulton National Bank of Atlanta v. Hozier, 267 U.S. 276, 280, 45 S.Ct. 261, 69 L.Ed. 609; Central Union Trust Co. of New York v. Anderson County, 268 U.S. 93, 96, 45 S.Ct. 427, 69 L.Ed. 862; Stuart v. Sargent, 283 Mass. 536, 539, 186 N.E. 649. In other cases there is a close connection between the object of the main suit and the claim which the intervener seeks to enforce. Check v. Kaplan, 280 Mass. 170, 177, 178, 182 N.E. 305; Pearson v. Mulloney (Mass.) 194 N.E. 458. But cases are not unknown in which, as in this case, an intervener seeks to assume control of the litigation and to prosecute it in the place of the original plaintiff. Check v. Kaplan, 280 Mass. 170, 182 N.E. 305; Hallett v. Moore, 282 Mass. 380, 185 N.E. 474, 91 A.L.R. 572; Mulready v. Pheeny, 252 Mass. 379, 148 N.E. 132.

An assignee of an assignable cause of suit may intervene for the purpose of assuming control of a bill in equity brought in the name of the assignor. F. A. Mfg. Co., Inc., v. Hayden & Clemons, Inc. (C. C. A.) 273 F. 374; Arwshan v. Meshaka (Mass.) 192 N.E. 162. Substantially the same thing has long been done in actions at law, but without any necessity of making the assignee technically a party, for until recent statutes the assignee could not be a party. But his right, even against the objection of the assignor, to control the litigation and receive its fruits, has long been protected by the court of law in which the action is maintained in the name of the assignor. Grover v. Grover, 24 Pick. 261, 266,35 Am.Dec. 319; Benson v. Whitney, 12 Cush. 234; Riley v. Taber, 9 Gray, 372; Walker v. Brooks, 125 Mass. 241, 247, 248; Pierce v. Boston Five Cents Savings Bank, 125 Mass. 593; Coffin v. Adams, 131 Mass. 133, 136; Troeder v. Hyams, 153 Mass. 536, 538, 27 N.E. 775; Heard v. Calkins, 234 Mass. 526, 125 N.E. 596; Brazill v. Green, 236 Mass. 93, 97, 98, 127 N.E. 535; Rogers v. Murch, 253 Mass. 467, 470, 471, 149 N.E. 202; Boston Heating Co. v. Middleborough Savings Bank (Mass.) 193 N.E. 12. This has been done even where the assignment was not voluntary but was by operation of law. Stevens v. Stewart-Warner Speedometer Corp., 223 Mass. 44, 46, 111 N.E. 771, and cases cited. Becker v. Eastern Massachusetts Street Railway, 279 Mass. 435, 442, 443, 181 N.E. 757; Murray v. Rossmeisl, 284 Mass. 263, 267, 187 N.E. 622.

We assume that this is a case in which a petitioner for intervention, though denied admission as a party ( Goldman v. Noxon Chemical Products Co., 274 Mass. 526, 528, 175 N.E. 67), may take exceptions or appeal from the denial of leave to intervene, because the denial is destructive of the right claimed by the petitioner. Check v. Kaplan, 280 Mass. 170, 178, 179, 182 N.E. 305; Credits Commutation Co. v. United States, 177 U.S. 311, 315, 316, 20 S.Ct. 636, 44 L.Ed. 782; United States v. California Canneries, 279 U.S. 553, 556, 49 S.Ct. 423, 73 L.Ed. 838; Palmer v. Bankers' Trust Co. (C. C. A.) 12 F.(2d) 747; Rheinberger v. Security Life Ins. Co. of America (C. C. A.) 72 F.(2d) 147.

The difficulty with the claim for intervention in the present case is that Piper's cause of action for deceit is not assignable before judgment. G. L. (Ter. Ed.) c....